When estimating costs, it is important to understand the effects of pricing on the approval of estimates and profitability. Contractor marketing and building a name for your business will depend upon your estimating costs.
Let the customer know the materials you will be using, if it is high-quality paint it will cost them more.
The estimate is a projection of the time and materials required to complete a job. The price is a function of the projected material costs, the projected labor costs, and the desired profit.
Pricing has two effects: it determines profitability, and it influences the workload. Both effects must be considered in determining the proper price level.
The closing rate is not applicable to specific jobs, but rather to a period of time. The closing rate can be calculated weekly, monthly or quarterly.
Two separate closing rates are used– the percentage of estimates approved, and the percentage of estimate value approved. Each provides a different view of pricing and its impact on approvals.
Used together, they provide a useful tool for determining price levels and projecting workloads.
In a painting company, the two main expenses to be considered when estimating costs are labor and materials. An estimate is essentially a prediction of the labor and material costs, with overhead (such as rent, insurance, advertising, etc.) and profit added.
If the estimator knows how long it takes his crew to perform each task, the process of producing an estimate simply requires quantifying each of these tasks.
Of course, each job will not be exactly the same. Different levels of prep will be required, different application methods will be used; access or masking situations will differ.
Identifying how your crew performs is a vital part of estimating costs in the contractor business. An estimator must know the experience and performance of his workers to make an accurate estimate.
By breaking down the job into each of its components, and assigning a production rate to these components, this process eliminates the guesswork often associated with estimating. In addition, it provides a systematic approach to the estimating process.
When estimating costs of the actual painting, determining the height of some surfaces can present a challenge. Running a measuring wheel up a wall will not be tolerated by most customers, and can result in damage to the surface.
On the exterior, measuring the height of some surfaces may be impossible without a ladder and/ or an assistant. In such instances, several methods can be used. If the surface has siding, the number of boards (or sheets) can be counted. The height can then be determined by multiplying the number of boards or sheets by the width of each board or sheet.
The estimator can also rely on standard building practices to obtain measurements of reasonable accuracy– each floor on a multi-story house is generally 10′ or 12′ tall on the exterior.
Because the estimator can measure the length of a particular wall, these heights can be used to obtain the surface area. Interior walls are generally either 8′ or 10′ high.